Friday, June 17, 2005

Peter Petersen - Deficits and Serious Concerns for US Servicing Debt

Jim Sinclair described in the New York Times recently as one of the most famous gold speculators, whose website is, has written about an interview on TV with Mr. Peter G. Petersen.

Sinclair describes Mr. Peterson as "The Chairman and one of the founders of the outrageously successful Blackstone Group. He is Chairman of the Council of Foreign Relations, founding Chairman of the Institute of International Economics (Washington DC), founding President of the Concord Coalition. Mr. Peterson was the Co-Chair of the Conference Board Commission on Public Trust and Private enterprises (Co-Chaired by John Snow, currently Secretary of the US Treasury). He was Chairman of the Federal Reserve Bank of New York from 2000 to 2004."

Sinclair says "Mr. Peterson spoke of his close and personal relationship with Federal Reserve Chairman Greenspan. He made many extremely important points in his conversation:

1. He spoke of three serious deficits, the Budget Deficit, Trade Deficit and what he considered to be the most important, the Current Account Deficit.

2. He added to these deficits what he considered to be just as important, the deficit in personal savings by US consumers.

3. He pointed out that a cumulative Budget Deficit of US$7 trillion was looming in this generation.

4. He spoke of Chairman Volcker's opinion on a lower US dollar.

5. He spoke of a prestigious group of 12 people and their views on the US dollar of which 11 expect it to go between 10 and 15 percentage points lower.

6. He pointed out that a Current Account Deficit running at 6 ½ percent of GDP must be considered as another cumulative item that will result in a foreign debt equal to 125% of a single year's GDP.

7. He pointed out that the servicing cost of this debt is a factor and possibly the most serious concern.

8. He concluded with the comment that expectation that international entities will continue to support this growth and the cumulative nature of the Current Account Deficit by purchasing US debt is not necessarily guaranteed."

Sinclair says "Petersen's interview was the most measured, articulate, non emotional sound analysis of the various complex conditions leading towards an epiphany for investors that will impact markets with the significance of Tsuami from 2006 to 2008 and then from 2009 to 2012."

Sinclair says the gold bull markets major move will be driven by the establishment
and that establishment will listen to Mr. Peterson.

Sinclar says "The move toward gold by the establishment big guns has started." and that in his opinion, 2006 to 2008 will be best years ever for the gold price.

Sinclair warns not to wait until 2006 to buy gold or you will find you are much too late. He says "things always start quietly before it becomes apparent. People trying to time the gold market perfectly are going to be left behind in the comet's debris trail."

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